Consumer Federation of California

In eco-conscious California, ballot measures that support alternative energy
should be the political equivalent of apple pie – impossible to oppose.

But two propositions on the November ballot that would radically change
California’s energy future have left a sour taste in the mouths of many
environmentalists, consumer advocates and utility executives.

One of the measures, Proposition 7, would require California to derive half
its electricity from renewable sources by 2025, far above the state’s current
goal of 20 percent by the end of 2010.

The other, Proposition 10, would hand rebates to companies and people who buy
vehicles that run on natural gas or other fuels that aren’t gasoline – rebates
paid for with $5 billion in state bonds.

Both propositions, placed on the ballot separately by different groups, are
billed as the next logical step in California’s fight against global warming.
Backers say that if the state wants to cut its greenhouse gas emissions, it must
rapidly increase its use of the sun, the wind and alternative fuels.

"We’ve got to develop a sense of urgency," said S. David Freeman, the former
head of Los Angeles’ municipal utility, who supports Prop. 7. "We’re at the
stage where I think the human race should be added to the Endangered Species
Act."

Critics agree on the need for urgency. But they argue that each proposition
is fatally flawed.

Prop. 10, critics say, is little more than a taxpayer-funded giveaway to
Texas oilman T. Boone Pickens, who is pushing a nationwide plan to increase the
use of natural gas as a transportation fuel. His natural gas company, Clean
Energy Fuels, has provided nearly all of Prop. 10’s $7.7 million campaign fund.
And while the proposition also includes money for renewable power research, the
biggest chunk of funding would go to vehicles that burn natural gas or other
alternative fuels.

"Look, we’re not against natural gas," said Richard Holober, executive
director of the Consumer Federation of California. "What we’re against is using
billions of dollars of tax money – precious tax money – to distort the market
and promote one form of energy over others that we think have a much better
future."

Critics of Prop. 7, meanwhile, argue that it is so badly drafted that it
would hinder – not help – the spread of solar power and wind energy. Opposition
to the measure has united an improbable coalition of utility companies,
environmentalists and renewable power developers.

"Putting an unworkable system on the ballot is really in no one’s interest,"
said Jan Smutny-Jones, executive director of the Independent Energy Producers
Association. His organization represents about 80 percent of the state’s
renewable power generators.

"My job is to promote renewables," he said, "and to have to oppose an
initiative that says we want 50 percent renewables is an awkward thing to
do."

The proposition’s supporters call those concerns nonsense and say
California’s big utility companies – which have contributed $28.9 million to
fight the proposition – just don’t want to buy that much renewable power. The
other opponents are simply providing cover for the utilities, said former San
Francisco Supervisor Jim Gonzales, one of the proposition’s lead authors.

"When you go after electricity generation, you’re going after a very, very
powerful special interest that has links into a variety of organizations up and
down the state," he said.

Prop. 7, officially called the Solar and Clean Energy Act of 2008, would
double the speed with which California’s utilities must increase their use of
renewable power. Instead of adding 1 percent per year, as current state law
requires, the utilities would need to add 2 percent. By 2025, 50 percent of the
electricity they supply would need to come from solar installations, wind farms,
geothermal plants and other forms of renewable power generation.

To get there, the proposition would streamline the process for granting
government approval to renewable power projects. But its many details worry, if
not alarm, some renewable power advocates.

For example, part of the proposition appears to say that only renewable
projects that generate 30 megawatts or more of electricity will count toward the
50 percent goal, said Ralph Cavanagh, director of the Natural Resources Defense
Council’s energy program. One megawatt is enough to power 750 homes, and many
renewable projects fall below 30 megawatts.

"We’re on the verge, I think, of a surge of renewable energy, and I don’t
want to see it interrupted by this initiative," Cavanagh said.

Steve Hopcraft, a spokesman for the Prop. 7 campaign, said the 30-megawatt
standard would be used only to determine which projects need state government
approval, versus those that can be approved by local governments. Smaller
projects would still count toward the 50 percent goal.

"Why would we double the pace of adopting renewable energy and at the same
time say, ‘No, you can’t count anything under 30 megawatts?’ " Hopcraft said.
"It would be idiocy for us to do that."

Prop. 10 hasn’t drawn quite as much attention.

Dubbed the California Renewable Energy and Clean Alternative Fuel Act, it
would issue $5 billion in general obligation bonds and split the proceeds into
several accounts. More than $2.5 billion would go toward rebates for people or
companies that buy vehicles running on natural gas or any alternative fuel whose
greenhouse gas emissions are at least 10 percent lower than gasoline or diesel.
Rebates would range from $10,000 for cars to $50,000 for heavy-duty trucks.

A smaller pool of money – about $110 million – would pay for rebates for cars
that use regular gasoline but get at least 45 mpg. And $230 million would fund
rebates for cars that get at least 60 mpg, a standard that appears to exclude
most everything except plug-in hybrids. The rest of the bond money would help
finance wind farms and large solar arrays as well as pay for alternative-energy
research and public demonstration projects.

Supporters acknowledge that Pickens’ company probably would benefit if the
proposition passes. Clean Energy Fuels bills itself as the nation’s largest
provider of natural gas for vehicle use and has fueling stations scattered
throughout California.

But Prop. 10 supporters say other fuels would be able to compete for the same
funding as natural gas. And the state officials who would be in charge of
passing out rebates would ensure that trucks receiving the rebates would be used
in California – not just purchased here and shipped out of state. The money
California spends repaying the bonds – about $335 million per year, according to
the state Legislative Analyst’s Office, would buy a real reduction in greenhouse
gas emissions, they say.

"The money will stay here, and the benefits will accrue to California," said
John Dunlap, former chairman of the California Air Resources Board.